Uber and Lyft denied in bid to have their drivers paid as independent contractors

Both taxi apps Uber and Lyft were denied in their bids to have their driver's status as independent contractors rather than employees.

In both separate cases, the judges ruled that juries will determine whether the drivers are employees or independent contractors.

Drivers for both companies are seeking class action lawsuits contending that they are employees and therefore should be reimbursed for expenses (such as gas and vehicle repairs) which they now pay out of pocket.

If the juries rule that they are indeed employees, the cost to Uber and Lyft would be huge. The companies would have to pay Social Security, worker's comp and other local and state insurance costs.

Uber is the most valuable private startup in the U.S. at $40 billion and rival Lyft has also raised hundreds of millions of dollars at a valuation in the billions.

2 user comments

Uber owes these people absolutely nothing besides what is in their contract. A lot of people mistakenly think being an Uber or Lyft driver is just fun and easy and you can make a lot of money really fast (all you have to do is have a good car, provide good service, and now you're rich! It's just driving, after all!).

What is it with people not reading terms and conditions before agreeing to them? This is not some quickly hit 'I agree' for a software license (most of the time harmless, sometimes really bad). This is signing up for a job where you do what you can to get the job (get a lease for a car, insurance, etc) and the contract states you are a contractor and not an employee!

All drivers signing up should really understand what it is to be a contractor:
- READ THE WHOLE CONTRACT!
- Payment is on their schedule not yours. That means net-35 days can literally mean the last second of net-35 days.
- You are not owed anything extra from them! Expect only what is stated in the contract to the letter.
- In the US at least, you must save money and file your taxes as a contractor properly and factor this into how much you are actually making.
- In the US, when under a contract, you buy your own health insurance among other insurance types. That is your responsibility.

This is all doable. I do it because I am and have been a contractor for many jobs, including online affiliate marketing, website development, app development, etc. It is easier with an accountant (that can include working with a company like H&R Block for taxes at the least), but it is doable if you are an otherwise educated individual familiar with how contract jobs work. Otherwise, educate yourself.

This is abused in the USA by greed of business who wish to avoid payment of Social Security/ Workman's Compensation / unemployment insurance / liability insurance.

I recall one person who tried telling his "contractors" workman's compensation he deducted was for their benefit. The real truth it protects the title of the property owner from liability for injury and death claims.

In the case of these drivers, the "service" seeks to maximize profits and insulate the shareholders from tort liability claims.

The consequences of an adverse decision from IRS can be anything from civil interest and penalties to triggering a full audit.

In the case of an audit 3 years is civil, when they go for a 7 year audit- criminal violations of the tax codes come into play.

I am a big kid, not afraid of the dark, but I fear the IRS- all an agent has to do to seize everything a person has is to : believe the tax-payer (victim) is not going to pay.

Important: any document the IRS sends has to have an OMB form number, otherwise it is suspect of legality.